By Chris Trotter*
“Hang tough”. President Donald Trump is cautioning his followers against allowing the world’s stockmarkets to spook them. One Republican congressman even backed his leader by folksily comparing what was happening to the early stages of renovating a bathroom. Sure, everything’s a chaotic mess at first, but then: “Oh, wow, that looks so much better!”
We wish!
The world’s stockmarkets are not tanking because investors are lacking in faith, they are tanking because those responsible for investing billions of dollars, looking ahead, can find nothing positive in the consequences of Trump’s “Liberation Day”.
Nothing.
Remember in the movie “Margin Call”? when CEO, John Tuld (played by Jeremy Irons) delivers this chilling line?
“I’m here for one reason and one reason alone. I’m here to guess what the music might do a week, a month, a year from now. That’s it. Nothing more. And standing here tonight, I’m afraid that I don’t hear - a - thing. Just ... silence.”
It would seem that Wall Street is only now coming to terms with the fact that Donald Trump is serious about “the most beautiful word in the English language” – tariffs. That his admiration for President William McKinley is sincere. That he really does believe in protectionism. That this is not just the opening gambit in what will turn out to be the most artistic deal of Donald Trump’s career. That the planet’s biggest investors weren’t hearing things – that really was the sound of the global economy being blown apart.
Just how serious things have gotten was revealed over the weekend when Elon Musk, Trump’s (former?) right-hand man, dismissed Peter Navarro, Senior White House Counsellor for Trade and Manufacturing (and the person generally credited with putting the flesh on Trump’s pro-tariff bones) with the contemptuous observation: “He ain’t bullshit!”
Musk is also reported as telling a gathering of Italian politicians that:
“Both Europe and the United States should move, ideally, in my view, to a zero-tariff situation, effectively creating a free trade zone between Europe and North America.”
Which would seem to suggest that, faced with the choice of following the President, or following the commercial instincts that made him the world’s wealthiest man, Musk has opted for the latter.
As the screenwriter of “Margin Call” J.C. Chandor, shrewdly observed:
“You know, the feeling that people experience when they stand on the edge like this isn’t the fear of falling – it’s the fear that they might jump.”
Clearly, the world’s wealthiest man is not yet ready to defy economic gravity.
The planet’s most influential investors are no more willing than Musk to step off the edge. Even if it was possible to repatriate textile production instantaneously from South Asia to the United States, which it most emphatically is not, why would anyone with billions to invest do such a thing?
Remember the words of Bruce Springsteen’s poignant “My Home Town”:
They’re closing down the textile mill
Across the railroad tracks
Foreman says, “These jobs are going, boys
And they ain’t coming back
Lines which, though laced with bitterness, were nevertheless true – or should have been.
Why would anyone put money into building a new textile mill in anyone’s home town when there are already highly efficient textile mills in Vietnam and Cambodia with workforces willing to manufacture product for a fraction of the wage that an American worker, even a Trump-voting American worker, would get out of bed to earn?
The American economy is the most sophisticated, the most innovative, and the most lucrative on the face of the planet. The future of American manufacturing does not lie in textile mills on the Great High Plain, but in what UK Prime Minister, Harold Wilson, speaking more than 60 years ago, described as “the white heat of technology”. That means AI and robotics – not the power loom.
That’s why stockmarkets from Wall Street to London, Tokyo to Frankfurt, are screaming at Donald Trump in the only language which (against a mounting pile of evidence) they believe he still understands, to call this madness to a halt. To reaffirm the fundamental laws of the capitalist universe. To sever the self-fashioned rope binding him to the most catastrophic economic decision since the Smoot-Hawley Tariff Act of 1930, before it drags him – and the rest of us – into a totally unnecessary global recession.
Will he listen? Will the trillions of dollars wiped off the value of global stocks be enough to make him reverse direction?
In attempting to answer this question, it is worth recalling the answers Bill Clinton gave to workers threatened by the relentless unfolding of neoliberal capitalism back in the 1990s.
Speaking to an audience of factory workers during the 1992 New Hampshire primary, Clinton refused point-blank to lie to them. Like the foreman in Springsteen’s song, he told them that the jobs that were going, or had already gone, weren’t coming back. More importantly, from the point of view of political and economic physics, he explained how neither he, nor any American president, could bring them back. All he could promise – and did promise – was to help them adapt to the brave new world that was emerging from the ruins of the post-war economic order.
That Clinton’s crucial, and election-winning, promise was never kept, is what made Trump possible.
But only at the huge moral and economic cost incurred when politicians promise to implement policies lacking even a tenuous attachment to reality. Confronted with the degradation and squalor of American deindustrialisation, and sensitive to the seething anger and resentment it had spawned in the hearts of Rustbelt voters, Trump declared his intention to Make America Great Again. Spurning the grim honesty of Springsteen and Clinton, Trump promised his desperate MAGA demographic that those jobs would be coming back – by Executive Order.
Why did Trump make such a promise? The answer is, almost certainly, psychological.
The most profound threat to the billionaire mind, and there are plenty of examples which confirm this, is the delusion that material reality is susceptible to the will of those indomitable spirits who refuse to take ‘No’ for an answer. How else could any reasonable person explain the uncountable wealth that they were able to amass?
Gripped by such megalomaniacal delusions, billionaires bitten by the political bug are utterly convinced that whatever they decide the nation needs, they can deliver. Experts who object that the policies they are proposing are impossible, and that any promises they have inspired are undeliverable, merely demonstrate the weakness of their wills and the paucity of their ambitions.
Little men achieve little, but great men are capable of great things. History’s body is covered with the terrible scars of such megalomaniacal arrogance.
There is, however, one very thin silver lining to emerge from Trump’s protectionist turn. The potentially fatal blow it has dealt to the delusions of the Left.
Driven much more by simple nostalgia than megalomania, leftists around the world have for many years railed and rallied against free-trade and globalisation. (Remember the massive street demonstrations against the Trans-Pacific Partnership?) This left-wing opposition was understandable. After all, the 35-year commitment to “managed” capitalism that lasted from 1945 until 1980 was probably as close to socialism as they were ever likely to get without gulags.
But, now, at last, the Left can see what the defeat of globalisation looks like, and will, hopefully, grasp the authoritarian nature of the politics required to achieve it. A classic vindication, surely, of the saying: “Be careful what you wish for.”
Assuming, of course, that Donald Trump’s wishes do come true. That he can, indeed, defy the laws of political and economic physics. That he can successfully impose, by executive fiat, one of the largest tax increases in American history, and not pay a very high price for his actions at the next mid-term congressional elections. That he will not, in the end, be reminded, forcefully, of the persistence of political gravity.